To stay competitively in the game, power plant players of thefuture need to manage a lot of risks: fuel, market, financial andpolitical, which can change almost as quickly as the weather,according to a panel of electric power honchos speaking at lastweek’s Cambridge Energy Research Associates’ CERAWeek 2001 meetingin Houston.
Calpine CEO Peter Cartwright shared a plenary session withMirant Corp. CEO Marce Fuller, Cinergy Corp. CEO James E. Rogersand Duke Energy Services CFO Kirk B. Michael. All spent a lot oftime debating the energy problems that have fouled California inrecent months, but moved away from current problems to focus onwhat they see as positive developments for the country and theircompanies’ futures because of recent news.
“California presents an interesting challenge,” said Cartwright.”It validated a lot of what we’d been telling the market for a longtime – that demand for power would exceed the forecasts.” He saidCalpine is working through a “minefield” of problems, but the SanJose, CA-based company would be “part of the solution, not part ofthe problem,” because “we are citizens of California.”
Mirant’s Fuller echoed Cartwright, telling thestanding-room-only audience that the “major key” for the newlyformed Southern Co. subsidiary was to take advantage of themarket’s opportunities. As the first utility affiliate that will becompletely separate from its regulated parent as of April 2, Fullersaid Mirant will have to take risks, but more important, it willhave to manage those risks to ensure success.
“California, if nothing else, was a wake-up call for theplayers,” she said. “There has been a mindset in recent years thatthe United States is risk free, that the real risks are overseas.What we have seen lately is that there are just as many risks hereas around the world.”
One key to managing risks is to be an active participant inshaping the market and structuring the rules, said Fuller. She saidthe company had “10 people camped out in Sacramento” to help withthe legislative fixes. “We also want to be a part of the solution.”
Though Mirant makes more money outside of the United Statescurrently, this should change in the near future with moreinvestment along the East Coast. The company, she said, wasbuilding out “a lot of assets,” with the majority in natural gas.
However, like other CERAWeek panelists this week (see relatedstory), she said, “I for one believe coal will come back,”especially in areas where it had been big before. “I see no way ofadding coal in different markets like California, as difficult asit is to site a natural gas plant.” But adding diversity wasimportant for Mirant, and she suspected that more power plants alsowould consider regional diversity to include dual fuels or coal.
Relying on natural gas as the dominant supply also concernedDuke’s Michael. In the near term, problems have been created wheredemand outstrips supply. In the long term, he worried thatcompanies could create a “generation stack that was overlydependent on one fuel source.”
Cinergy CEO Rogers’ message on natural gas and coal’s futuredittoed the participants more forcefully. “From my point of view, Isee changes in the market. How much longer can we go with gas?” Hesaid 95% of new U.S. generation would be natural gas. “Is it goodnational policy to rely on one fuel? I see the day of coal comingback. What’s happening in depending on gas is a fatal flaw in thecountry today.” Rogers said the United States was at a “dangerouspoint in the country” by relying so completely on natural gas.
Carolyn Davis, Houston
©Copyright 2001 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.
© 2021 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 1532-1266 |